SpiceJet In Talks With Boeing, Airbus For $11 Billion Aircraft Deal

29/07/2015 3:12 PM IST
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Updated
15/07/2016 8:25 AM IST

Reuters

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INDRANIL MUKHERJEE via Getty Images

An Indian-operated SpiceJet Boeing 737-800 aircraft (foreground) takes off as a British Airways Boeing 747-400 aircraft (background) sits on the tarmac at the international airport in Mumbai on October 1, 2009. The London-bound British Airways flight BA138 with about 250 passengers aboard made an emergency landing here as the fire alarm went off in the cockpit soon after its take off. The flight took off from the Chhatrapati Shivaji International Airport at 0300 hours but landed back at 0410 hours as the fire alarm went off in the cockpit, a Mumbai International Airport spokesperson said. AFP PHOTO/ Indranil MUKHERJEE (Photo credit should read INDRANIL MUKHERJEE/AFP/Getty Images)

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NEW DELHI — Budget airline SpiceJet Ltd. is in talks with Boeing Co. and Airbus Group to acquire about 100 new narrow-body jets, its chief financial officer said on Wednesday, in a deal that would be worth about $11 billion at list prices.

SpiceJet wants to buy more Airbus A320neo and Boeing 737 Max aircraft, Kiran Koteshwar told Reuters, as it looks to rebuild its business after almost collapsing last year.

Koteshwar said the company plans to place an order, which would be its biggest ever, by the end of this financial year and would look to raise fresh equity or debt to pay for the planes once it had decided how many to buy.

"We have to place an order so we have a long-term business plan in place. The focus is now on sizeable growth," he said.

There is no guarantee the talks will lead to a firm order.

SpiceJet's expansion plans come after India's second-largest low-cost carrier almost collapsed, before being bailed out by new chairman Ajay Singh in January.

SpiceJet has less than 20 Boeing narrow-body jets, while its market share has shrunk to 12 percent in June from around 20 percent a year ago after it cut capacity to stay in business.

India's airlines are expanding their fleets as they compete to win a bigger slice of what is one of world's fasting growing markets for air travel but one where most players are plagued by losses as the fight for passengers pushes ticket prices below costs.

Rival IndiGo, which is profitable and the largest Indian airline by market share, has kept costs low in part by placing large orders for a single type of plane through the sale and leaseback model.

Koteshwar said any new order would largely be on a sale and leaseback model, and that a big order would help it to keep future costs lower.

"SpiceJet has always been constrained by the lack of long-term orders. This will give us economies of scale and for our vendors and suppliers to see that we are growing," he said.

SpiceJet reported a Rs 71.80 crore net profit on Tuesday for the three months ending in June, against a Rs 124.1 crore loss last year, after falling oil prices and a cost-cutting drive outweighed a slump in revenues.

Its shares were up 3.2 percent in intra-day trade on Wednesday, outpacing a 0.3 percent rise in the wider market.